Texas Builder Spars with Local BBB

A franchisee of Blue Haven Pools is waiting to see if the Texas Supreme Court will hear a case involving it and the local Better Business Bureau.

The Blue Haven office in Lewisville, Texas, sued the Better Business Bureau of Metropolitan Dallas for breach of contract after a dispute over advertising led to the builder losing its accreditation and seeing its rating drop drastically. The franchisee, located approximately 20 miles outside Dallas, also sought a temporary injunction preventing the BBB from publishing the low rating.

Court documents show the builder had been accredited by the BBB since 1981 and enjoyed a longstanding A+ rating when the parties came to a disagreement over use of Blue Haven’s slogan, “World’s Largest!”

As a condition for membership, the BBB holds companies to certain advertising standards and occasionally conducts reviews to check for compliance. The BBB is organized geographically, with each office issuing certification and ratings for neighboring businesses. According to Blue Haven, “World’s Largest!” has been accepted by other regional BBBs.

According to court documents, the BBB office approached the Blue Haven franchisee in summer, 2010, expressing concerns about three advertising claims after a BBB employee noticed an ad in the Dallas Morning News. Two of the issues were resolved immediately, but one remained: The BBB wanted the builder to substantiate the “World’s Largest!” slogan. The phrase was trademarked as part of the Blue Haven national logo in 1991, according to court documents, with many offices using it in advertisements even earlier.

As proof, Blue Haven submitted Pool & Spa News’ Top 50 Builders lists from 2007 to 2011, during which the national builder took the No. 1 spot based on its reported residential construction revenue across all offices. Further, it said, the USA has the most active pool market across the globe and so, by deduction, Blue Haven is the world’s largest.

In its court petition, the company drew an analogy: “Just as winning Super Bowl teams ... declare themselves ‘World Champions’ without worrying about rival footballers from Estonia or Uruguay, to be the top builder in the United States is to also be — without question — the top builder in the world.”

Blue Haven explained it maintains an A+ rating with the neighboring Fort Worth BBB, in whose jurisdiction the ads also run. Additionally, the BBB in San Diego, where the national builder is headquartered, had accepted the slogan and the firm’s proof.

“Anytime this issue has come up with the BBB, we’ve provided the information to them and the issue has been addressed,” said Dawn M. Grams, P.C., the Grapevine, Texas-based attorney representing the franchisee. “So you have one BBB in the whole U.S. that believes that we can’t substantiate the claim, when all the remaining BBBs have no issue with it.”

But the Dallas Bureau was not satisfied. It called the phrase “world’s largest” an objective claim that can and should be quantified. The BBB asked the builder to identify five countries with “a significant pool-building presence,” name the largest builder in each, and explain how Blue Haven surpasses them.

But the builder said that information was not available. Among other reasons, Grams said it’s impossible to measure an American pool builder against international counterparts, which often include aboveground pools and other products in their figures. “It’s kind of like comparing apples and pears,” she said.

The parties reached a stalemate, so the local BBB invited Blue Haven to resign its accreditation to avoid the negative effects of revocation. Blue Haven did not do that, the BBB said, leading to the loss of accreditation and the drop from an A+ to an F. On its Web site, the Bureau explains the low rating by citing “Advertising issues found by BBB” and briefly describing the concerns.

The Blue Haven office estimates it has lost $750,000 to $1 million because of the downgrade, according to Grams. “It’s been a tremendous loss for Blue Haven,” she said. “They consistently lost business as soon as they rated Blue Haven with an F.”

The builder sued the BBB for breach of contract, saying it had paid $1,000 a year to become an accredited business, which created a contract between the two entities. The builder said Texas law bars the BBB from interpreting its substantiation requirement in an unreasonable manner. It cited a Texas law that calls it a breach when one party to a contract interferes with the other’s performance using “wrongful means.” Blue Haven said it made good-faith efforts to substantiate the “World’s Largest!” claim, but that the BBB imposed demands that made it impossible.

Blue Haven seeks to restore its accreditation and A+ rating or, barring that, to compel the BBB to remove the F rating and never refer to it or the advertising dispute.

The BBB said it acted in good faith by giving Blue Haven the option to prove, change or remove its claim, and by following procedure. Furthermore, it said, the BBB has required other firms to prove similar claims.

“I know the Bureau followed its policies in challenging this particular advertisement,” said the BBB’s attorney, David C. Myers, with the Dallas-based firm Jackson Walker.

The BBB office filed a motion to dismiss, citing the First Amendment and the Texas Citizens Participation Act. According to the TCPA, if a defendant proves it was exercising free speech, the case must be thrown out and the defendant awarded court costs.

“They have been publishing ratings for almost 100 years, and more recently on the Internet,” Myers said. “That’s part of what the Better Business Bureau does is provide those ratings for consumers, and they have a right to their opinion. It’s a free-speech right.”

The Dallas County Court in which the complaint was filed declined to dismiss the case. A court of appeals, however, sided with the BBB and ordered the Blue Haven franchisee to pay court costs. Last month, the builder requested that the Texas Supreme Court hear the case.